Uploaded February 2025 | Updated September 2026, 1 week ago

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In this session, we discussed how to measure the relative risk of a company, starting with betas (regression versus bottom up) but also examining alternative measures of relative risk, some based on prices and some on accounting earnings. In short, the end game is coming up with a risk-adjusted cost of equity (discount rate), and the process is open to alternatives to what you may see as flawed measures of risk.

Start of the class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/cftests.pdf
Slides: nyu.box.com/s/2p0zkb6krm1htxkjmwqz991lkxo3bvxr
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session7Atest.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session7Asoln.pdf